Railtrack investors' cash target

RAILTRACK shareholders said they are fighting for compensation of between 60p and 280p a share from the Government following its decision to put the business into administration. They are also consulting lawyers to see if the flotation prospectus was misleading and if Railtrack was fit to be sold.

Against this backdrop, Transport Secretary Stephen Byers was meeting the company to discuss value for shareholders. But equity holders were sceptical of this.

'Byers may think throwing a crumb out will appease investors but it won't. Somewhere in the range of 60p to 280p is what we will be after,' said one big investor. Railtrack shares were suspended at 280p, and cash in the company is thought to amount to at least 60p a share.

'It has become received wisdom that under-investment in the railways goes back 40 years. That gives rise to doubts about the state of what was sold to us,' said a shareholder. Executives today began proceedings against HSBC, which has frozen £350m belonging to Railtrack's parent Railtrack Group, which is not itself in administration.

Meanwhile, sources close to senior Railtrack directors say chairman John Robinson's approach to the Government did not work. Robinson became chairman last June and took responsibility for liaising with the Government.

'He is a very headstrong fellow. People who know their way round Whitehall would not have acted in the way he did,' said one source. Another said: 'If you act like a bull in a china shop, you tend to get a lot of china broken.'

Railtrack's demands for funds increased significantly over the past six months and senior directors are understood to have felt frustrated with the way in which Robinson sought the money. On Tuesday he turned down the chairmanship of the not-for-profit entity that will take over Railtrack's business. It has also emerged that he offered the Government the entire company in return for extra money.

Railtrack chief executive Steve Marshall resigned from his post this week but is working his notice. Other board members are thought likely to quit although there is a grim determination to fight the Government on behalf of investors.

Meanwhile, Gareth Jones, who stepped down on Monday as head of Abbey National's wholesale banking arm, said he is keen to play a role in the new rail entity. 'It is just the sort of thing I find interesting,' he said.